EU Market: EU carbon eases with softer energy complex

Published 17:45 on September 14, 2015  /  Last updated at 15:18 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

European carbon prices dipped slightly on Monday on a softer energy complex, in a very quiet trading day that saw the benchmark EUA contract trade in a narrow 7-cent range.

European carbon prices dipped slightly on Monday on a softer energy complex, in a very quiet trading day that saw the benchmark EUA contract trade in a narrow 7-cent range.

The front-year futures, trading on ICE Futures Europe, ended down 3 cents at €8.24 on volume of just under 3.8 million units changing hands.

The Dec-15 EUAs traded in a €8.22-8.29 range, closing below their volume-weighted average price of €8.26.

Activity down the EUA futures curve was healthier, with 2.3 million allowances traded for delivery between Mar. 2016 and Dec. 2020.

German baseload power prices eased, along with DES ARA coal, most UK gas forward contracts and the euro against the dollar.

However, when combined this did little to shift the German calendar-year clean dark spreads away from their recent elevated levels.

“Carbon remained supported in spite of the wider market volatility and weak energy complex due to widening clean dark spreads. Given coal’s fall carbon should have been stronger and was presumably tempered by increasing auction volume,” Redshaw Advisors wrote in a note to clients.

Governments are due to auction a total 15.08 million allowances this week, up from 12.89 million last week.

“(This week’s higher sale volumes) will provide a stronger test of the market’s resilience,” Redshaw Advisors added.

A group of 25 EU nations earlier on Monday sold 2.918 million spot EUAs for €8.21 each, in an auction that cleared 2 cents below market and attracted bids worth a total 7.83 million units.

“With all financial markets and investors focusing on the (interest) rate decision of the US Federal Reserve on Thursday, we might see prices stabilizing at current levels and moving sideways in the first half of this week,” said Bernadett Papp, an analyst with Budapest-headquartered Vertis.

“Volatility might increase on Friday, when markets have the possibility to react on the US news and the MSR is expected to receive its final rubber stamp from the European Council.”

The Council’s final approval of the MSR is seen as a formality as the measure has already been agreed by ministers, parliamentarians and the European Commission.

Meanwhile, no CERs were traded on ICE on Monday.

Below are this past week’s auctions, clearing price, distance to secondary spot EUA market, and bid-to-cover ratio:

14/09/2015 EU 2,918,000 €8.21 -0.02 2.68
15/09/2015 EU 2,198,000
16/09/2015 UK 3,123,000
17/09/2015 EU 2,198,000
18/09/2015 EU 3,198,000

 

By Mike Szabo – mike@carbon-pulse.com

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